It has been repeated throughout the league for months now: If the Mavericks can find a way to trade Shawn Marion, use the amnesty provision on Brendan Haywood and move all or most of their other players before free agency begins, they will have enough cap space to offer max-level contracts to both Dwight Howard and Deron Williams.
Reality is more complex for everyone involved once you dig into the numbers, which I’ve done with help from several cap gurus and lawyers.
Dirk Nowitzki will earn $20,907,128 next season, per ShamSports and other sources. The salary cap for 2012-13 is expected to stay almost precisely flat at around $58,044,000.
Even assuming the Mavs move Marion and amnesty Haywood between now and July 1, they are still on the hook for guaranteed money to the following players, per ShamSports:
• Lamar Odom ($2.4 million)
• Vince Carter ($2 million)
• Dominique Jones ($1,276,560)
• Roddy Beaubois ($2,227,333)
That’s another $7.9 million, bringing the Mavs’ 2012-13 salary bill — without Marion and Haywood, mind you — to a shade under $29 million.
But let’s assume the Mavs, through the brilliant creativity of their front office, manage to offload every single one of these players without them counting for even $1 combined on the Mavs’ 2012-13 cap sheet. That’s unlikely and perhaps impossible, but let’s just assume it happens.
That leaves only Nowitzki’s $20,907,128 salary, but the Mavs would actually have much more on the books than that. When a team has fewer than 12 players on its roster — and the Mavs in this scenario would have only one — the league forces them to add a cap charge for each roster spot up to 12. The charge is equal to the rookie minimum salary, set to be $473,604 next season, according to a summary of the new collective bargaining agreement. Multiply that by 11 empty roster spots, and you get a total of $5,209,644.
Add that to Nowitzki’s salary, and you’re looking at an absolute minimum of $26,116,772 on the Mavs’ 2012-13 cap sheet. If you can do basic subtraction, you find the Mavs in this scenario are left with $31,927,228 of cap space.
In short: The Mavs would be able to offer Williams and Howard starting salaries of about $15.95 million each before filling out the rest of the roster using the $2.5 million room exception and the veteran’s minimum salary. The problem: Both Williams and Howard are eligible to earn significantly more than $15.95 million next season.
How much are they actually eligible to earn? That depends on what happens between now and July 1. To give every advantage to the Mavs, let’s assume the Magic keep Howard through the trade deadline, and that Howard opts out of his contract after the season. Howard is earning $18,091,770 this season. Under league rules, if he opts out and becomes a free agent, any team other than Orlando with enough cap space could sign Howard to a four-year deal with a first-year salary of $18,996,358 — or 105 percent of his salary for this season.
Recall the Mavs, in our favorable scenario, have $31.9 million in cap space to split among Howard and Williams. If they decide to pay each equally, Howard is already in line for a $3 million pay cut in Year 1 of his deal with Dallas. If the Mavs toss an extra $1 million or $2 million at the big fella, that only means an even larger pay cut for Williams.
The Nets’ star point guard will earn $16,359,805 this season. Like Howard, if Williams opts out and becomes a free agent, he could earn a maximum first-year salary equal to 105 percent of his prior salary — or about $17,177,795. You’ll notice that number is well above the $15.95 million figure mentioned earlier.
There is no way I or anyone else I chatted with can see Dallas being able to offer both of these guys max-level contracts. Both would have to take a pay cut if they decide to sign with Dallas together, and that pay cut multiplies over the years. Over a four-year contract that starts at $15.95 million and carries the maximum 4.5 percent annual raises that Dallas can offer, Williams and Howard would earn about $68.2 million each over four years.
Howard could earn about $81.27 million on a max-level four-year deal from a non-Orlando team with cap room to offer one — or from Dallas, if the Mavs decide to only offer one huge deal instead of two. Williams could earn about $73.49 million on such a deal over four years. The four-year haircut isn’t so severe for Williams — about $5 million total — but it’s quite severe for Howard.
The tax situation in Texas can offset some of that, and the Mavs can also offer the appeal of Nowitzki, a well-liked and very successful coach in Rick Carlisle, first-class facilities, a popular owner, a creative front office and a long track record of winning. But they cannot offer the max to both guys.
This of course raises a related question: How much can Howard and Williams earn by changing teams via free agency versus by re-signing with Orlando and New Jersey, respectively? Has the new CBA done enough to give incumbent teams an advantage?
Let’s dig in. Both Howard and Williams could maximize their earnings by opting in for next season (something both their contracts allow), becoming a free agent after next season and then re-signing with their team for the maximum five years at the maximum rate.
Howard’s option for next year — the one he’ll surely decline if he isn’t traded to a team he likes by March 15 — is worth $19,536,360. If he stays with Orlando next season for that amount, the Magic can re-sign him to a five-year deal with a starting salary of $20,513,178 and 7.5 percent raises each year. In that scenario, Howard would earn $138,684,958 over the next six seasons. Yowza.
If he opts out and changes teams before next season as a free agent, his first-year max salary is lower — the previously mentioned $18,996,358. If he signs a max-level four-year deal with his new team and then re-signs at the maximum level with that same team four years later, under the current rules, Howard would earn $128,500,998 over the next six seasons. That’s about $10 million less over six seasons than he’d get by sticking with the Magic — about $1.7 million per year, before taxes and such. The gap is also about $10 million for Williams in this scenario.
Put simply: Howard and Williams stand to lose at least about $10 million in raw salary over the next six seasons by leaving this summer as free agents and signing a maximum deal with another team. (They could actually lose a bit more by switching teams via free agency again four years later instead of re-signing, but let’s leave that aside.)
The caveat is that both players could get the absolute maximum by getting traded before the deadline to a team with which they’d like to stay long-term, opting in under their current deals and then re-signing a max-level five-year deal with that team. This is why Howard’s advisors want him traded soon to, say, New Jersey, instead of having to get there via free agency. But again: The free agency route only “costs” about $10 million over the next half-dozen seasons, if all goes well.
The league likes to toss around the idea that players will forfeit “$30 million” by switching teams in free agency, but that just isn’t accurate. The $30 million estimate compares the five-year deal Orlando and New Jersey can offer their respective free agents this summer with the four-year deal rivals like Dallas can offer, but it does not account for the fact that Star Player X will receive a hefty salary from his new team in that fifth season, which erases a big chunk of the pay differential.
Again, this $10 million differential applies only to the absolute maximum-level deals these players can sign this offseason. Dallas can only offer such a deal to either Williams or Howard, but not both. Other players have taken pay cuts before in order to jump into a winning situation, and given that these are two of the dozen best players in the league, Dallas would be absolutely right to go for the home run. But it won’t be as easy as rumors made it out to be.